Forex Trading Education - 2 Simple Tips to Start Winning

By: Harold Hsu

Tip #1 - Trade Less

This doesn't mean that you should pay less attention to your trading charts. What I mean is that you should enter into fewer trades which have a higher probability of winning.

Many new traders make the mistake of entering into every single "decent" trade setup that they see. The problem with this approach is that these traders are concentrating too much on maximizing their chances of winning (more trades, more chance to win right?), without considering that they are actually increasing their chances of losing too! Generally speaking, the more trades you enter into, the more risk you are taking.

Forex trading is a risky business, so try not to increase the amount of risk that you're already taking. When you enter into trades less frequently, you'll naturally choose those with a higher probability of winning, and NOT enter into trades with a lower probability of winning.

Remember, in Forex trading, it's not about how many times you win, but how MUCH you win. Even if you only have one successful trade each month, it's enough for you to be rich if you can be consistent about it.

Tip #2 - Put Your Eggs In One Basket

I'm sure you've heard of the phrase, "Never put all your eggs in one basket" which refers to the diversification of your funds. Generally, this is good advice.

However, in the Forex market, a better piece of advice would be "Only put SOME of your eggs in one basket".

Similarly to Tip #1, placing too many trades at the same time will dramatically increase your risk of losing. Trading too many currency pairs at the same time, is a tactic used by many inexperienced (and often losing) traders. They think that by diversifying their trades, they can better limit their potential losses.

This is a big mistake unless you have a large capital pool to trade with.

If you only have $2,000 of capital to trade with, for example, your stop loss levels are going to be very tight if you have too many trades open at the same time.

This often results in most of your stop losses being triggered, causing you to immediately lose in your trades.

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